Placeable CEO: Local Directories May Die Off

If there’s one model in the local marketing industry that’s picked up where daily deals dropped off in 2011, it’s the directory management play: give us money, and we’ll distribute your content to the hundreds of directories scattered across the web. Yext raised a war chest, SinglePlatform cashed in, and now, hundreds of companies are clamoring for part of the pie.

But that model might be coming to its own day of reckoning, says Ari Kaufman, chief executive at Placeable, a company that helps large enterprises structure, format, and distribute their own local data and content. Kaufman believes that the intense competition in the market is quickly commoditizing the product, and will create a downward pressure on the rates these services can charge. But more importantly, Kaufman argues that the fragmented ecosystem of local directories — from which the directory management model draws its value — may soon die off. Thanks to changing strategic incentives and evolving trends in the search market, Kaufman believes that Google may make changes to its local algorithm that work to push traffic directly to first parties, or keep traffic within its own ecosystem altogether.

Street Fight caught up with Kaufman to talk about the state of the local search ecosystem, why Google might devalue directories, and what it means for large brands.

When we spoke last you questioned whether directories’ role in the local ecosystem may be coming to an end. Walk us through that argument.
There are a couple of pieces to the puzzle. One is that, historically, Google has taken steps to clean up the index, and eliminate companies and websites that leverage other brands to drive traffic to their websites so that they can monetize with advertising, which is what directories do. Google’s business model is to monetize that traffic and advertising, not send the traffic to someone else so that they can monetize with advertising.

Ari Kaufman, chief executive at Placeable.

Often, people assume that if you build a website, and you bust your ass with SEO, and you get to the top of page one, Google is going to send you traffic. I don’t think that people ever really stop to acknowledge that Google doesn’t owe you anything. Google doesn’t owe you the traffic. Google doesn’t have to send you the traffic. Google is in the business of making money, and 35 percent of the traffic on Google is local. There’s no reason why, when Facebook has demonstrated the ability to keep over 52 percent of all worldwide traffic operating inside its own hermetically sealed system, that Google can’t turn around and do the same thing successfully. And so, if Google was to turn around and decide that all of the traffic is now going to be pushed to the map, there’s plenty of content about locations and plenty of other capabilities that relate to places such as Shopping, Google Wallet, Carousel and others. There’s no reason why that can’t all be run through a closed map.

How has Google handled the owned versus indirect property relationship in the past?
In local, Google has stuck to the “use and refuse” model with multiple vendors in the past. Whether it’s Yelp reviews or something else, they will leverage something while they’re building it internally and then eliminate it once they’ve reached critical mass. The new Google Maps platform has great integration of content, great integration of location information, great integration of advertising. It make sense that the directories at some point will not rank properly on Google for a couple of reasons, it makes potential sense that new organic listings, which are diminishing in real estate already, potentially that traffic gets shifted to the map entirely.

So what’s holding Google back?
Google is sort of stuck. They have to put directories on page one because a local search, or branded or non-branded local search, isn’t able to optimize a local landing page for a major brand because the major brands very often don’t have local landing pages. And so the only local landing pages out there are the directories and that’s why the directories are getting on page one. Ultimately that’s not going to last. The brands are going to recognize and finally come around and get their local landing pages up, which will outperform the directories. The other piece is that Google Places and Google Maps continue to take more real estate away from the directory, more real estate away from organic. So you kind of have this trifecta of potential things that squeeze out the organic listings, and squeeze out the directories from being on page one.

There’s been a big push recently from search firms like Yelp to integrate commerce capabilities into results. How does that push into commerce play into this scenario?
We’re already starting with different customers to integrate point of sale and inventory availability into the data that they distribute. So, there’s already integration to a local page, and I don’t think that they’re as far away from pushing content to Google Places or to Google Maps to tie into to shopping products and services that are available right there where the transaction could happen right there. Would the advertiser prefer to have that transaction happen on the advertising website? Absolutely. But I think that it’s not going to be a choice of the advertiser.

I think that what’s going to happen is that that local traffic is going to take place inside of Google just like it does inside Facebook. What they’ll do is they’ll open up the doors for you to be able to push more content to them, and host that content in the cloud so that you’re able to sync up with Google, or sync up with Facebook, with more availability of products and services so that you can allow a transaction to happen out there.

In cutting out the middleman in directories, one would imagine that brands need to play a more active role in shaping their customers’ local search experience.
From the marketer’s perspective, brands face three fundamental problems. The first one is just pure acceptability of the content. They can’t get the data, or they’ve got to wait three months for a ticket to be addressed to get the content they’re looking for, to get a file, or a feed formatted to what they’re looking for.

The second problem is the accuracy of that content. So when they’re looking for information about their own locations, and I don’t mean just NAP information, but let’s say it’s an insurance company and you want bios about their agents, and they want verifications on their agents, and they want Twitter feeds, Facebook accounts, photographs, and video files. These feeds and files fit in various places. Some of them fit in the sales department, some of them fit in the marketing department, some of them fit in the HR department, some of them fit in supply chain management department. And they’re not in one place.

And then the third is that usability problem, which is: “If I can get my hands on the data, and I can get my data cleaned up, I’m still working with ten different partners — all of whom use different formatting standards, and I’m going nuts because I have to do all manually.”

How did the Placeable product emerge from the team’s experience building and selling the LocationInsight product?
We would have signed a contract for local landing pages and data distribution, and SEO, and then we sit for eight months waiting for [the client] to get their content to us. And so we built this platform that allowed them to just give us the feeds — their marketing feeds, supply chain management feed, and HR feed — and our platforms would consolidate their content and pull out the respected fields from each feed that mattered. That was the reposition and aggregation of content, and then would produce the accuracy of the right record for each location by giving users the ability to fix the data, cleanse, and formalize it so that you can, you know, clean it up and figure out, you know, which field you want to pull from each file and create this sort of universal ingredient like content, and then distribute the content out to search engines, and directories, and stuff like that.

Interesting article. In Ari’s opinion, local search directories could soon die off, but it sounds like Placeable’s business proposition is essentially the same: taking a place page, similar to one found on a local directory and distributing that content to publishers. In the near future, If Google is pushing traffic away from 3rd party providers in favor of Google itself, what would distinguish Placeable from any other 3rd party?